{"id":51152,"date":"2024-12-13T21:44:00","date_gmt":"2024-12-14T02:44:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=51152"},"modified":"2025-11-28T21:46:03","modified_gmt":"2025-11-29T02:46:03","slug":"ffn-pr-a-retraction-quadravest-coy-on-details","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=51152","title":{"rendered":"FFN.PR.A Retraction: Quadravest Coy on Details"},"content":{"rendered":"

Quadravest has announced<\/a>:<\/p>\n

\n

North American Financial 15 Split Corp. (the \u201cCompany\u201d) invests in a high-quality portfolio consisting of 15 financial services companies made up of 40% Canadian and 60% U.S. issuers. The top five holdings currently held in the portfolio are as follows: JP Morgan Chase & Co., Goldman Sachs Group, Morgan Stanley, Wells Fargo & Co., and Bank of America.<\/p>\n

The recent extension of the Company’s termination date included a retraction right for Class A shareholders and Preferred shareholders. The Company will not require a rebalance of shares and all retraction rights have been satisfied.<\/p>\n

The Company may use the normal course issuer to repurchase Class A shares at or below intrinsic value. The current intrinsic value exceeds $8.00 per share.<\/p>\n

As previously announced, the annual dividend rate for the Preferred Shares has been set at 8.75% (subject to a 5-year minimum of 7%). The dividend policy for the Class A Shares will remain at the current targeted rate of $0.11335 per month, or $1.36 per annum. <\/p>\n<\/blockquote>\n

This retraction potential existed due to the extension of the fund’s term<\/a>, which came with special retraction provisions.<\/p>\n

As IrateAR<\/i> remarks<\/a>, the Capital Units have shown:<\/p>\n

\n

crazy price moves in that one the last few days.<\/p>\n<\/blockquote>\n

… which may be the reason Quadravest saw fit to issue the above press release – nothing has yet been disclosed for other extended issues DF.PR.A, LFE.PR.B, FTN.PR.A and DFN.PR.A. <\/p>\n

FFN showed a 2024-12-11 VWAP of 7.26 on normal volume of a little under 300,000 shares, but on 2024-12-12, volume spiked to nearly 700,000 shares with a VWAP of 7.12. Today’s VWAP was 7.04 (and it closed much higher) on volume of 1.36-million, which is all wild enough.<\/p>\n

What makes it stranger is that, as hinted in the press release, the Capital Units are trading below intrinsic value – the NAVPU was 18.29 on 2024-11-29, so it’s easy to believe the claim that the current intrinsic value exceeds 8.00 per share. It’s not normal for a Capital Unit to trade below intrinsic! It is, effectively, a reasonably normal leveraged portfolio that is also long a put option (to the preferred shareholders, at a NAVPU strike price of 10.00) on the whole whack. To trade below intrinsic, Capital Unitholders would have to assign a value to the fees and expenses associated with the fund which, horrendous though they might be, are rarely accounted for.<\/p>\n

So … something’s going on with the Capital Units that I don’t understand. Prior to the press release, it might have been uncertainty – a good sized consolidation of capital units would have:<\/p>\n